Personal Health care mandate FTB Penalty

Overview

Beginning January 1, 2020, California residents must either:

  • Have qualifying health insurance coverage
  • Obtain an exemption from the requirement to have coverage
  • Pay a penalty when they file their state tax return

You will begin reporting your health care coverage on your 2020 tax return, which you will file in the spring of 2021.

Make sure you have health care coverage

To avoid a penalty, you will need health coverage for each month beginning on January 1, 2020 for:

  • Yourself
  • Your spouse or domestic partner
  • Your dependents

Many people already have qualifying health insurance coverage through:

  • Employer-sponsored plans
  • Coverage purchased through Covered California or directly from insurers
  • Medicare
  • Most Medicaid plans

Contact your plan provider to verify if their specific plan meets the minimum essential coverage (MEC) requirements.

Get coverage

If you do not have coverage, open enrollment continues through January 31, 2020. Visit Covered California to sign up for health care coverage.

Special enrollment period

Due to the economic impacts from COVID-19, individuals may now enroll in health care coverage during Covered California’s special enrollment period now underway. Eligibility requirements are similar to those in place during the annual open-enrollment period. Visit Covered California or call (800) 300-1506 to get more information.

Exemptions

You may qualify for an exemption to the penalty. Most exemptions may be claimed on your state income tax return while filing.

Exemptions processed by FTB and Covered California

Exemptions Claimed on State Tax ReturnExemptions Processed by Covered California
  • Income is below the tax filing threshold
  • Health coverage is considered unaffordable (exceeded 8.24% of household income for the 2020 taxable year)
  • Families’ self-only coverage combined cost is unaffordable
  • Short coverage gap of 3 consecutive months or less
  • Certain non-citizens who are not lawfully present
  • Certain citizens living abroad/residents of another state or U.S. territory
  • Members of health care sharing ministry
  • Members of federally-recognized Indian tribes including Alaskan Natives
  • Incarceration (other than incarceration pending the disposition of charges)
  • Enrolled in limited or restricted-scope Medi-Cal or other coverage from the California Department of Health Care Services
  • Religious conscience exemption
  • Affordability hardship
  • General hardships

Visit Covered California for more details.

You can apply for exemptions granted by Covered California starting in January 2020.

Financial help

If you need help meeting the requirements for health care coverage, the state may provide financial help. Help is available for qualifying individuals and families through Covered California and is based on:

  • Household size
  • Age
  • Income
  • Region

This financial help is through the state. You can still receive financial help from the state even if you receive federal financial help through Covered California.

Options for no-and low-cost coverage are also available through the Medi-Cal program.

To find out more about health insurance options and financial help, visit Covered California.

Penalty

You will have to pay a penalty, the Individual Shared Responsibility Penalty, when you file your state tax return if:

  • You did not have health coverage
  • You were not eligible for an exemption from coverage for any month of the year

The penalty for no coverage is based on:

  • The number of people in your household
  • Your California state income

Use our Penalty Estimator tool to estimate the penalty you may owe.

Sample penalty amounts

Household sizeIf you make less thanYou may pay
Individual$46,050$750
Married Couple$92,100$1,500
Family of 4 (2 adults, 2 children)$142,000$2,250

The penalty for a dependent child is half of what it would be for an adult, $375.

How to estimate

The penalty will be the higher of either:

  • A flat amount, based on the number of people in the tax household, or
  • A percentage of the household income

Flat amount

Pay $750 per adult and $375 per child.

Percentage of household income

Pay 2.5% of the amount of gross income that exceeds the filing threshold requirements based on the tax filing status and number of dependents.

Example:

A family of 3 with a gross household income of $150,000 that includes:
  • 2 parents
  • 1 child

Flat amount calculation
$750 per adult, $375 per child: ($750 x 2) + $375 = $1,875

Percentage of household income calculation
2.5% of gross income that exceeds filing threshold: ($150,000 - $49,085 [1]) x .025) = $2,522.88.

Penalty amount
Since the percentage of household income was higher than the flat amount, the penalty amount for this family is $2,522.88.

[1] $49,085 is the state filing threshold for a married couple, both under 65 years old with one dependent for the 2019 tax year.

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